HALO · Halozyme Therapeutics
Conviction · Low · more likely to lag the S&P 500 over the next three months
Wrong if: a weekly close above $114.77
Note written ·
How this view changed
- · Rating cut from Medium to Low. Analyst action, 11 November 2026: Morgan Stanley downgraded Halozyme to Equal-Weight from Overweight on 11 November 2026, citing valuation and scheduled royalty-rate step-downs led by Darzalex SC from 2028; it was the second downgrade in four sessions.
Price against the kill line
12.6% clear of its kill line on the 13 November 2026 close.
How to read this
This note expects the shares to lag the market, so its kill line sits above the price: a close above the red mark would prove the view wrong. Prices run from low on the left to high on the right. The dot is where the stock closed on 13 November 2026, left of the mark while it is below the line; a dot right of the mark has closed through it.
The scale is stretched near the line, so close calls are easy to see. More than 8% from the line, the stock reads well clear, with a hollow dot to show the figure is off the drawn scale.
The kill line is the research note's own test. The portfolio sells on business facts, not on a price. How the portfolio decides
Three months against the kill line
Daily closes, to . Red: the kill line, a weekly close above $114.77, set on 12 November 2026; only a weekly close settles it. The shares are down 2.7% since the close; the S&P 500 is down 2.1% over the same sessions. Figures in the note can cover a different window.
Kill line
A weekly close above $114.77, the 50-day moving average on 12 November 2026, which would show the shares recovering much of the post-earnings fall and leading the index. A Merck licence or settlement that pays Halozyme on Keytruda Qlex would also show the shares leading.
Research onlyNot in the portfolio.
Catalyst
Key figures from the filings · Health Care
Quarter to 30 September 2026, filed 5 November 2026; valuation at the 13 November 2026 close
- Revenue, latest quarter ($M)
- 493
- Revenue, change on a year (%)
- +39.2
- Gross margin (%)
- 83.3
- Operating margin (%)
- 59.8
- Free cash flow, four quarters ($M)
- 886
- Net cash, cash less debt ($M)
- −2,220
- Price to earnings (×)
- 23.6
- Enterprise value to sales (×)
- 7.6
All filed numbers
What Halozyme Therapeutics reports to the SEC in its quarterly and annual filings. Each group states its period and filing date once; a figure dated otherwise says so. Built from the filings known on .
| Quarter to | Revenue ($M) | On a year (%) | Gross margin (%) | Operating margin (%) |
|---|---|---|---|---|
| first filed | 493 | +39.2 | 83.3 | 59.8 |
| first filed | 481 | +47.7 | 83.5 | 59.8 |
| first filed | 377 | +42.2 | 79.0 | 49.0 |
| first filed | 452 | +51.6 | 82.6 | −20.6 |
| first filed | 354 | +22.1 | 84.4 | 61.5 |
| first filed | 326 | +40.8 | 85.8 | 62.2 |
| Pre-tax income ($M) | 291 |
| Net income ($M) four quarters: 485 | 247 |
| Diluted shares, change on a year (%) against the quarter to 30 September 2025 | +0.2 |
| Operating cash flow ($M) | 898 |
| Capital spending ($M) | 12.4 |
| Free cash flow ($M) | 886 |
| Cash and short-term investments ($M) | 1,030 |
| Debt ($M) non-current long-term debt plus current maturities | 3,250 |
| Net cash, cash less debt ($M) | −2,220 |
| Deferred revenue ($M) +261.9% on a year | 30.3 |
| Backlog, orders not yet delivered ($M) | Not reported |
| Receivables ($M) | 519 |
| Inventory ($M) | 133 |
| Shareholders' equity ($M) | −55.2 |
| Market value ($M) | 11,432 |
| Enterprise value, market value plus net debt ($M) | 13,652 |
| Enterprise value to sales (×) | 7.6 |
| Enterprise value to operating income (×) | 20.2 |
| Price to earnings (×) | 23.6 |
| Price to book value (×) | Not meaningful |
| Free-cash-flow yield (%) | 7.7 |
Short interest (FINRA, settled 15 October 2026, published 26 October 2026): 12.0% of shares outstanding sold short, 6.2 days of average trading to cover, −10.7% since the previous report.
| Window | Bought | Sold |
|---|---|---|
| 90 daysfrom | $0 | $19.9M |
| 12 monthsfrom | $0 | $43.8M |
The thesis
Halozyme Therapeutics' shares are more likely to lag the S&P 500 over the next three months. Two brokers downgraded the stock in the four sessions after its third-quarter report, and the debate has moved from today's royalty growth to scheduled royalty-rate cuts from 2028. The next tests are the 19 November 2026 German appeal hearing on Merck's subcutaneous Keytruda and Halozyme's 2027 guidance.
Halozyme licenses ENHANZE, an enzyme that lets drugmakers turn intravenous drugs into injections under the skin (subcutaneous, or SC). It collects royalties on its partners' sales. The business is still growing fast. Third-quarter royalties rose 44% to $341.0 million, and on 5 November 2026 the company raised every line of its 2026 guidance.
The rating is Low because the sell side has turned on duration. Leerink Partners cut the shares to Market Perform on 6 November 2026. Morgan Stanley cut them to Equal-Weight on 11 November 2026, and Seeking Alpha reports that its analyst, Sean Laaman, said the stock now trades in line with his base-case value. The shares closed at $122.96 on 5 November 2026, $103.63 on 6 November 2026 and $100.67 on 12 November 2026. On 11 November 2026 Morgan Stanley called the price a fair value. The main item that price leaves out is a royalty or settlement on Merck's Keytruda Qlex.
Bullish and bearish views on Halozyme Therapeutics, Inc.
The bull case on Halozyme Therapeutics, Inc. (HALO), in brief: royalties grew 44% in the quarter. The bear case: royalty rates step down from 2028.
Bull case
- Royalties grew 44% in the quarter. Halozyme's 5 November 2026 release reports third-quarter royalties of $341.0 million against $236.0 million a year earlier. Total revenue was $493.0 million, up 39%. Adjusted diluted earnings per share (EPS) was $2.39 against $1.72.
- Every 2026 guidance line rose. On 5 November 2026 the company raised royalty guidance to $1.235–1.255 billion and total revenue guidance to $1.860–1.925 billion. Adjusted EBITDA (earnings before interest, tax, depreciation and amortization) guidance moved to $1.240–1.290 billion and adjusted EPS guidance to $8.75–9.05.
- Newer ENHANZE drugs keep compounding. On 29 October 2026 Bristol Myers Squibb reported third-quarter Opdivo Qvantig sales of $334 million, against $67 million a year earlier. On 22 October 2026 argenx reported third-quarter Vyvgart net sales of $1.721 billion, against $1.127 billion.
- A new ENHANZE cancer approval. On 5 November 2026 the FDA granted accelerated approval to Johnson & Johnson's Rybrevant Faspro for previously treated recurrent or metastatic head and neck squamous cell carcinoma. The ASCO Post reports a 42% objective response rate in the OrigAMI-4 trial.
- The Medicare pricing overhang has eased. On 6 November 2026 Halozyme said the Medicare drug price negotiation final rule, released 5 November 2026 by the Centers for Medicare & Medicaid Services (CMS), points to zero to minimal impact on its royalties through 2035.
- European courts have sided with Halozyme. BioSpace reported on 8 October 2026 that a Dutch court ordered Merck to stop making and selling SC Keytruda in eight countries, including France, Italy and the Netherlands. Merck's third-quarter Form 10-Q says a German preliminary injunction also bars sales there.
- Some targets sit well above the price. On 6 November 2026 Citizens kept Market Outperform with a $149 target and Evercore ISI kept Outperform with a $125 target, per Benzinga.
Bear case
- Royalty rates step down from 2028. On 11 November 2026 Morgan Stanley downgraded the shares to Equal-Weight from Overweight and raised its target to $109 from $105. Its analyst cited scheduled royalty-rate cuts, led by Darzalex SC, Halozyme's largest stream, from 2028. Finimize reports that the bank sees the royalties peaking in 2029.
- Leerink argues the runway is short. Leerink Partners downgraded the shares to Market Perform on 6 November 2026 and raised its target to $117 from $110. GuruFocus reports that the firm cited limited long-term growth and royalty dependence.
- Guidance midpoints trailed some estimates. Chartmill put the new midpoints at $8.90 of EPS and $1.8925 billion of revenue, against consensus of $9.01 and $1.916 billion. MarketBeat lists a consensus target of $106.09 as of 6 November 2026, close to the 12 November 2026 close.
- Darzalex growth is slowing. Third-quarter 2026 Darzalex sales of $4.24 billion grew 15%, after 18.9% growth in the second quarter.
- Keytruda Qlex pays Halozyme nothing so far. Merck reported third-quarter Keytruda Qlex sales of $830 million against $35 million a year earlier. Qlex uses Alteogen's enzyme, so Halozyme collects only through damages or a licence.
- Insiders sold into the rally. SEC Form 4 filings show chief executive Helen Torley sold 60,000 shares at an average $110.18 on 6 October to 8 October 2026, after similar 60,000-share sales in August and September. Director Matthew Posard sold 5,230 shares at an average $108.54 on 1 October 2026. All were under Rule 10b5-1 plans.
Price setup
The shares closed at $100.67 on 12 November 2026, 24.9% below the 52-week intraday high of $134.00 set on 30 October 2026. The steepest drop came in one session. The close went from $122.96 on 5 November 2026 to $103.63 on 6 November 2026, the day of the Leerink downgrade. The Morgan Stanley downgrade session followed on 11 November 2026, with a close of $101.68 against $102.98 the day before.
The three-month change is 2.0%, measured from a close of $98.66 on 14 August 2026, so the autumn rally has been given back. The last close sits below the 50-day moving average and well above the 200-day moving average of $85.29, both as of 12 November 2026. The 52-week closing low is $61.63, set on 27 March 2026.
Catalysts ahead
- 19 November 2026: German appeal hearing on the Keytruda SC preliminary injunction (Merck Q3 2026 10-Q). An upheld injunction keeps pressure on Merck to license or settle, the main upside the price leaves out; a reversal frees Keytruda SC in Germany and weakens Halozyme's European position.
- 2 December 2026: Initial hearing on Halozyme's preliminary-injunction application in Italy (Merck Q3 2026 10-Q). Tests whether Halozyme's patent position holds in a further European court alongside the Dutch and German orders.
- ~20 January 2027 (est.): Johnson & Johnson fourth-quarter 2026 report. Shows whether Darzalex, Halozyme's largest royalty source, slows again after 15% growth in the third quarter and 18.9% in the second.
- ~February 2027 (est.): Halozyme fourth-quarter 2026 results and 2027 guidance. The first guidance to show how much the scheduled royalty-rate step-downs that Morgan Stanley flagged weigh on royalty growth.
What would change the view
A weekly close above $114.77, the 50-day moving average on 12 November 2026, which would show the shares recovering much of the post-earnings fall and leading the index. A Merck licence or settlement that pays Halozyme on Keytruda Qlex would also show the shares leading.
What it trades with
Halozyme trades on its partners' drug sales and its patent fight with Merck more than on the market. On 6 November 2026 Benzinga reported the Nasdaq 100 up 2%, while Halozyme fell from $122.96 to $103.63. Genmab also earns royalties on Johnson & Johnson's Darzalex, so Darzalex results move both stocks. Merck's Keytruda Qlex figures and Bristol Myers Squibb's Opdivo Qvantig figures feed directly into the Halozyme case. US drug-pricing policy is a sector-wide factor. Halozyme's 6 November 2026 statement on the CMS final rule narrows its own exposure.
The evidence, claim by claim (8)
- Third-quarter 2026 royalties were $341.0 million against $236.0 million a year earlier; total revenue was $493.0 million, up 39%; non-GAAP diluted EPS was $2.39 against $1.72. Halozyme Q3 2026 earnings release (8-K exhibit 99.1) · as of
- 2026 guidance rose to royalties of $1.235–1.255 billion, total revenue of $1.860–1.925 billion, adjusted EBITDA of $1.240–1.290 billion and non-GAAP diluted EPS of $8.75–9.05. Halozyme Q3 2026 earnings release (8-K exhibit 99.1) · as of
- Morgan Stanley downgraded Halozyme to Equal-Weight from Overweight and raised its target to $109 from $105, citing valuation and royalty-rate step-downs led by Darzalex SC from 2028. Seeking Alpha; Finimize; Benzinga analyst headline · as of
- Leerink Partners downgraded Halozyme to Market Perform and raised its target to $117 from $110, citing limited long-term growth and royalty dependence. GuruFocus; Benzinga analyst headline · as of
- Citizens raised its target to $149 (Market Outperform), Evercore ISI to $125 (Outperform) and Wells Fargo to $110 (Equal-Weight); MarketBeat lists a consensus target of $106.09. Benzinga analyst headlines; MarketBeat · as of
- Halozyme said it expects zero to minimal royalty revenue impact through 2035 based on the CMS Medicare Drug Price Negotiation Program final rule released 5 November 2026. Halozyme company statement · as of
- A Dutch injunction issued 7 October 2026 halts continued Keytruda SC sales in Denmark and Italy; the German appeal hearing is set for 19 November 2026 and an Italian injunction hearing for 2 December 2026. Merck Q3 2026 Form 10-Q · as of
- Chief executive Helen Torley sold 60,000 shares at an average $110.18 on 6 October to 8 October 2026 after exercising options at $18.41, under a Rule 10b5-1 plan. SEC Form 4 filed 8 October 2026 · as of
Sources
- HALOZYME THERAPEUTICS, INC. - Form 8-K - FY2026 · sec.gov ·
- Halozyme stock downgraded at Morgan Stanley (HALO:NASDAQ) · seekingalpha.com
- Morgan Stanley Downgrades Halozyme As Royalties Face A 2029 Peak · finimize.com
- Halozyme Therapeutics (HALO) Shares Drop Over 13% After Leerink Downgrade · gurufocus.com ·
- Merck & Co., Inc. - Form 10-Q - FY2026 · sec.gov
- Merck barred from making subcutaneous Keytruda in 8 European countries · biospace.com ·
- FDA Grants Accelerated Approval to Amivantamab and Hyaluronidase for Previously Treated HNSCC · ascopost.com
- Halozyme Therapeutics (NASDAQ:HALO) Q3 In Line, Guidance Midpoint Below Consensus, Shares Fall After Hours · chartmill.com
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